Thursday, October 9, 2014

BOE maintains rate, stock of assets, as expected

The Bank of England (BOE)) left its benchmark Bank Rate steady at 0.50 percent along with the size of its assets purchased at 375 billion pounds. The decision was widely expected.
The BOE, the central bank of the United Kingdom, added in a brief statement after a meeting of its policy-setting nine-member Monetary Policy Committee (MPC) that the minutes of its meeting would be published on Oct. 22.
The BOE is widely to be the first major advanced economy to raise its interest rate early next year and two of its MPC members - Martin Weale and IanMcCafferty - have already voted twice to raise rates by 25 basis points.
BOE Governor Mark Carney acknowledged on Sept. 25 that the BOE is closer to raising rates but the actual timing of a rate rise would depend on economic data and any increase in borrowing costs is likely to be gradual and limited.
On Oct. 2 BOE Deputy Governor Ben Broadbent said there is no need to raise rates yet as unemployment is still high and wage growth below pre-crises levels.
The headline inflation rate in the U.K. eased to 1.5 percent in August from 1.6 percent in July, well below the BOE's 2.0 percent objective, while the unemployment rate continued to decline to 6.2 percent in July from 6.4 percent in June.
The U.K. economy is the fastest growing major advanced economy, with Gross Domestic Product up by 0.9 percent in the second quarter from the first quarter for annual growth of 3.2 percent, up from 2.9 percent.